You have a portfolio of three bonds. The Long Bond will mature in 19 years and has a 5.5% coupon rate. The Midterm Bond matures in 9 years and has a 6.6% coupon rate. The Short Bond matures in only 2 years and has a 4% coupon rate.
A. Construct a spreadsheet that shows the value of these three bonds and the portfolio when the discount rate is 5%. The spreadsheet can look something like this:

B. Illustrate what happens when the discount rate increases by 0.5%. What do you notice about the changes in price between the three bonds?
C. Show the bond prices when the discount rate decreases by 0.5% from the discount rate in part A. What do you notice about the price change between Parts B and C?

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Now Change to 2 Interest Rate 5.50% Bonds Bond Price Now | Price After Change Change in $ Change in % 4 Long Bond 5 Midterm Bond 6 Short Bond 7 Total = $0.00 $0.00